VAT exemptions under SI 15 of 2024

Published: 12 February 2026

 

Statutory Instrument (SI) 15 of 2024, gazetted on February 9, 2024, serves as a major refining act for Zimbabwe’s Value Added Tax (VAT) framework. It effectively repeals the First Schedule of the principal regulations and replaces it with a comprehensive list of Exempt Goods and Services.

For the agricultural sector, this SI is a double-edged sword: it removes the 15% VAT burden from the point of sale for many inputs, but it simultaneously blocks farmers from reclaiming VAT paid on their own operational costs (input tax).


1. The Definitive List of Exemptions (SI 15 of 2024)

Based on Part I and Part II of the First Schedule introduced by SI 15 of 2024, the following agricultural goods and services are exempt from VAT:

Agricultural Inputs & Produce

  • Animal Feed (Paragraph 15): Any substance obtained by crushing or grinding with nutritive properties, including stock licks, vitamins, and minerals for livestock, poultry, and fish.

  • Animal Remedies (Paragraph 16): Substances for the diagnosis, prevention, or treatment of diseases in livestock, poultry, and fish.

  • Fertilizer (Paragraph 17): Substances in final form intended to maintain or improve plant growth and soil productivity.

  • Pesticides (Paragraph 18): Chemicals for the destruction or control of pests, including plant growth regulators, defoliants, and legume inoculants.

  • Plants & Seeds (Paragraph 19 & 20): Living trees, bulbs, roots, and seeds in a form used for cultivation.

  • Produce (Paragraph 7 & 11): A vast array of fresh vegetables and fruits including tomatoes, onions, cabbages, potatoes, apples, and citrus fruits. It also covers maize (corn), wheat, and soya beans.

Machinery and Equipment (Paragraph 4 of Part II)

The following items are exempt from VAT upon supply or import:

  • Tractors: (Heading 87.01) specifically for agricultural use.

  • Soil Preparation Machinery: Ploughs, harrows, scarifiers, and cultivators (Heading 84.32).

  • Harvesting & Threshing Machinery: Combine harvesters, hay balers, and machines for sorting/grading fruit or eggs (Heading 84.33).

  • Sprayers: Portable sprayers and agricultural/horticultural spray guns (Heading 84.24).

Tobacco Sector (Paragraph 8, 9, & 10)

  • Tobacco supplied on auction floors.

  • Unmanufactured tobacco (Heading 24.01).

  • Commission charges on tobacco sales at auction floors.

     


2. VAT Implication: The “Exempt” vs “Zero-Rated” Trap

In Zimbabwe, agricultural inputs were traditionally Zero-Rated. The shift to Exempt under SI 15 of 2024 has massive accounting implications that every taxpayer must understand.

Non-Reclaimable Input Tax

When a good is Exempt, the seller does not charge VAT to the customer. However, the seller is also prohibited from claiming back the VAT they paid on their own business expenses (e.g., fuel for transport, electricity for irrigation, or packaging materials).

Example: A farmer buys irrigation equipment for $11,500 ($10,000 + $1,500 VAT). If the farmer’s produce is Exempt, they cannot claim that $1,500 back from ZIMRA. That $1,500 becomes a permanent cost of production.

Registration Thresholds

With effect from January 1, 2024, the compulsory VAT registration threshold was reduced from US$40,000 to US$25,000.

 

  • If your farm only sells exempt goods (like maize and fertilizer), you are not required (nor allowed) to register for VAT.

  • If you have a “Mixed Supply” (e.g., you sell exempt maize but also charge for taxable trucking services), you must register if your taxable turnover exceeds the threshold. You then have to apportion your input tax claims, which is a complex administrative task.

 


3. What Agricultural Taxpayers Need to Do

To remain compliant and protect margins under SI 15 of 2024, agro-based businesses should:

  1. Recalculate Cost Structures: Since VAT on overheads is no longer refundable for exempt goods, your “true” cost of production has likely increased by roughly 2% to 5%. Adjust your pricing or budget accordingly.

  2. Verify Commodity Codes: Ensure your imports match the specific codes listed in the SI (e.g., Heading 84.32 for tillers). If the code doesn’t match exactly, you may be charged the standard 15% VAT at the border.

  3. Audit Invoicing Practices: Ensure your fiscal devices are programmed to reflect Exempt (E) status for these items. Mistakenly charging 15% VAT on an exempt item can lead to significant penalties, as that money is legally “debt due to the State” even if charged in error.

 


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